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Monthly Newsletter

*. December 2010. *. Monthly Newsletter. Quick Links:. Video Index Abstract Index. *. *. VIDEO INDEX. Initial Public Offering Explained Introduction to Dividend Yields. *. *. Asian IPOs Overtake the U.S. Google’s Tax Tricks Lining Up for Free Apps Mind-Reading Movies

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Monthly Newsletter

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  1. * December 2010 * Monthly Newsletter Quick Links: Video Index Abstract Index

  2. * * VIDEO INDEX • Initial Public Offering Explained • Introduction to Dividend Yields

  3. * * • Asian IPOs Overtake the U.S. • Google’s Tax Tricks • Lining Up for Free Apps • Mind-Reading Movies • Innovating with Open Books and Shared Profits • Ivy League Endowment Difficulties • Princeton University vs. Princeton Borough • Responsible Banking with CDFIs • Derivatives in Disguise • The Dangers of ETFs ABSTRACT INDEX

  4. * * • Asian IPOs accounted for 66 percent of all money raised globally with $134 billion. • The U.S. sunk to its lowest IPO share in history at 11 percent. • A stagnant American economy and rapid growth of Chinese and Indian companies led to the dramatic IPO role reversal. Asian IPOs Overtake U.S. Article indexVideo index

  5. * * • Why are IPOs important to companies? What do you think? • What does the lag in the number of U.S. IPOs imply? Article indexVideo index

  6. * * • Only 2.4 percent of the $12.5 billion Google earned overseas since 2007 was taxed. • Google routes all its global earning through its Dublin office, where it is then funneled through a shell company in Holland then on to Bermuda. • While perhaps unethical, Google’s tax dodging is entirely legal. Google’s Tax Tricks Article indexVideo index

  7. * * • How is Google able to legally take advantage of such tax breaks? What do you think? • Is Google acting ethically in using different tax laws to its benefit? Photo courtesy of Thomas Sommeregger Article indexVideo index

  8. * * • Two college grads devised a smartphone app to estimate line wait times, but initially lacked the data to make it work. • Line Snob was released as a free app on the iPhone marketplace and rewarded users with coupons every time they updated a line time. • The company makes money by charging hotels and casinos a monthly fee to use the app to announce line times for buffets or shows. Lining Up for Free Apps Article indexVideo index

  9. * * • What key entrepreneurial characteristics seemed to drive Alder & Chabbott? What do you think? • What’s the major challenge for Line Snob going forward? Article indexVideo index

  10. * * • Developer NeuroSky uses MindWave technology for a product that allows the wearer to alter the outcome of a film using their brainwaves. • NeuroSky tested the product with a version of Rocky IV in which users could change the outcome of the movie’s climactic fight. • NeuroSky’s goal is to produce original films that operate based on the collective thoughts of an audience. Mind-Reading Movies Article indexVideo index

  11. * * What do you think? • Why would the film industry experiment with product customization? • How long will a product like NeruoSky be in the introductory stage? Photo courtesy of Cory Doctorow Article indexVideo index

  12. * * • Studies show that open-book management and profit sharing increase employee innovation. • Once all employees are on a level playing field, great ideas can come from anywhere. • Only 1 percent of American companies grant employees access to accounting records or participate in profit sharing. Innovating with Open Books and Shared Profits Article indexVideo index

  13. * * What do you think? • Why do employees react so favorably to open-book management? • Why do companies restrict employee access to accounting records and profit sharing? Article indexVideo index

  14. * * • David Swensen’s management of Yale’s endowment grew substantially for decades, and other Ivies copied his methods. • Once the financial crisis hit, elite universities had to borrow billions since most of their cash was tied up in complex investments. • Harvard’s 27.3% nosedive prompted cuts at the student level, including reducing shuttle bus service and eliminating hot breakfasts. Ivy League Endowment Difficulties Article indexVideo index

  15. * * What do you think? • What lesson does this story teach us? • What other important financial principle comes to mind from the abstract? Photo courtesy of John Terhorst Article indexVideo index

  16. * * • As an educational institution, Princeton University’s land holdings are tax-exempt. • Princeton Borough estimates the university could contribute more than $30 million to the community if taxed properly. • The university claims the financial crisis took a big chunk out of its endowment, which still stands at a comfortable $12.5 billion. Princeton University vs.Princeton Borough Article indexVideo index

  17. * * • Should wealthy universities like Princeton be exempt from local taxes? What do you think? • Are business practices different at private universities than at private sector businesses? Photo courtesy of Doug Kerr Article indexVideo index

  18. * * • Community development financial institutions (CDFIs) provide loans and financial education to small businesses in impoverished areas. • CDFIs take an active role in the businesses of their borrowers in order to ensure their loans get paid back. • First Lady Michelle Obama based her healthy food initiative on a Pennsylvania CDFI that financed more than 85 health food stores. Responsible Bankingwith CDFIs Article indexVideo index

  19. * * • What seems to be the winning formula for CDFIs success? What do you think? • As the economy improves, will CDFIs be able to survive? Article indexVideo index

  20. * * • Though instrumental in precipitating the financial crisis, derivatives can still be sold to individuals when bundled with bonds. • Unsuspecting investors often buy these complicated securities thinking they are standard bonds. • Investors are snatching up these structured notes, with sales of the securities jumping 58% to $31.9 billion through August. Derivatives in Disguise Article indexVideo index

  21. * * • Should investors be told of all risks of investments sold by brokers? What do you think? • What lesson do investors need to remember from the financial crisis of 2008? Article indexVideo index

  22. * * • Exchange-traded funds (ETFs) are bundles of stocks, bonds or other investments that trade like a single stock. • Though ETFs can be a safe way to diversify, their growing popularity is spawning confusing new ETFs that function unpredictably. • ETFs can be closed if they fail to raise enough money and sometimes end up with returns far lower than the index they track. The Dangers of ETFs Article indexVideo index

  23. * * What do you think? • What’s the best advice for investors wanting to invest in ETFs? • Do ETFs look like a fad investment? Article indexVideo index

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